The Slow Rise of the Tablet App for Retirement Plans

Apps that are created
for use on tablets offer the potential for greater functionality than a typical
mobile app, Corporate Insight says in its recent report “Retirement on the Move: Tablet
Edition,” an overview of retirement plan tablet apps.In the defined contribution (DC) world, users could view account balances
and analyze fund data or asset allocations on the move, and the larger screens of tablets would make
certain tools easier to use and multimedia resources more accessible.

Yet only three out
of the 17 plan providers Corporate Insight follows—Fidelity, Vanguard, VALIC—offer
an account-specific app,
according to the report.

“The retirement industry as a whole seems to
be lagging the banking and brokerage industry in the mobile space,” says Andrew Way, senior analyst
of the Retirement Plan Monitor at Corporate Insight in New York, noting that the gap is unsurprising.

The demand is simply not as high as it is for
retail and other financial accounts, Way tells PLANSPONSOR, noting, that in
retirement, people are more invested in longer-term investment vehicles, and don’t
log into their accounts as often. And, unlike a checking account, which might
see weekly or daily activity, there is usually much less to do on the website
for an individual’s retirement account.

But the demand does exist, and it’s growing,
according to Way, who says Corporate Insight anticipates more firms will
offer these applications. In February 2013, when the
firm last conducted similar research there were just two apps, which have
both been redesigned, and joined by a third tablet app from VALIC.

Vanguard is the only provider that offers an
app for use on devices other than an iPad—the firm’s app can be downloaded on
Android and Kindle Fire devices—while Fidelity’s NetBenefits app can be used on
an Android tablet, the report notes, it is not optimized for tablet use.

In general, about one-third of users log in to
view educational content on these sites, according to Way, which can include
videos, podcasts and short articles.

At the moment, and with such a small sampling
size, there’s little consistency among the apps or the features. For example, T.
Rowe Price offers a retirement-focused educational app with content articles and
a calendar of compliance dates. Way says this app addresses plan sponsors as
well as plan participants, with content for the two separate audiences. “That
calendar definitely is more geared for plan sponsors,” he says, while content
such as videos with life event themes and educational content is intended for plan participants.

Firms are offering convenience when they
offer an app, Way says, which ties in to how people like to access information.
More and more, people are likely to turn to a smartphone or tablet—something
more portable than a home computer—for speedy access or to get quick
information.

“A mobile app is not a be-all, end-all,” he
points out. “Obviously, the funds a provider gives access to is more important.
But [apps are] a big convenience. Providers are actually seeing more unique logins on
mobile than on desktop computers.”

Way observes that the tablet market has
plateaued to some extent, but usage rates still trend toward phone and tablet use
rather than desktop, so the technology is a welcome added convenience and
providers are likely to continue seeing how it can fit into their offerings.
For example, he explains, “When participants are on home tablets, they’re
browsing through news and may see a news story about a mutual fund they’re
invested in. You might jump onto the Vanguard mobile app and change allocations
to get out of the fund.” Because the process is far less cumbersome than going
to a computer and logging in, it speaks to people’s natural tendency to browse
on a device.

Tablet and phone apps have great potential to
engage plan participants, Way says, and providers will likely look to offer
more in the way of performance charts, educational videos and retirement-themed
games. Plan advisers will most likely find these account-specific apps useful for tools to engage participants, since retirement projection tools can easily demonstrate shortfalls and give recommendations. Fidelity’s tablet app has a “How Do I Compare Tool,” which, makes use of social comparisons in retirement savings. Participants can compare their current balance, contribution rate and rate of return with those of people their age across four different geographic segments, by ZIP code, state, region and country.

The
function of a particularly useful app as a good differentiator if a plan
sponsor is choosing between two providers, Way feels. “You like the funds and
the reps of both firms, but Vanguard’s tablet app could be the tiebreaker,” he
says. Another is the transactional capabilities Way thinks more providers will
offer. “People should be able to change up allocations, rebalance,” he
observes. Perhaps they won’t perform these tasks constantly, but the
convenience is a selling point, and could also be used as an easy way for
participants to increase their deferral rate.

Way also sees tablet apps as a retention tool
when participants switch jobs. “You want to retain the assets you have when
your customers move on to a different job,” he says. “Firms need to do as much
as possible to make customers want to keep the assets at the company.”

A summary
of the report, as well as information about how to purchase the full results, is
available here.